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Never Back Smug: A Lesson for Life Sciences From Newt Gingrich

Newt Gingrich comes across on TV as someone who radiates smugness. It’s that sense that he’s not just confident in his own abilities, but extremely satisfied with his talents and his utter superiority over mere mortals like you and me.

I’m no political pundit, nor a psychologist, so I’ll let others analyze whether Newt is presidential material. But good old Newt got me thinking this past week about this specific character trait, and other unappealing elements of personality, that we often see in leaders of the life sciences industry. Bob More, a veteran venture capitalist with Frazier Healthcare Ventures, inspired me to delve into character this week with one recent comment on Twitter.

“Politics pretty similar to backing CEO’s. Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,” More wrote on his Twitter account (@Bobmorevc).

Given how often people harp about the need to find superb management teams for developing new drugs or devices, I followed up with More to hear his thoughts on character traits to back, and to back away from, in life science entrepreneurs.

The No. 1 character trait to look out for, according to More and his mentor Jim Blair at Domain Associates, is trustworthiness. Dishonesty, to them, is the king of all deal-breakers. For example, More says he once worked for six months scrutinizing every imaginable aspect of a prospective investment for Domain, which he was quite excited about. Then at the last minute, the entrepreneur mentioned a slight change to the term sheet.

Bob More

“It felt like one of those things where a real estate agent comes in at last minute, and says ‘Oh, it’s just another $6,000 fee for the house,'” More recalls. He left that meeting with doubts about the executive’s credibility in other situations. When he asked Blair for advice, the response was memorable: “Kill the deal. Life is too short to deal with people like that,” More recalls Blair saying at the time. (Blair confirmed the story, and added that it wasn’t the only time he’s stopped an investment because of character concerns.)

This is tricky stuff, because all kinds of dishonesty unfortunately passes for standard procedure in business—ever hear of an executive resigning to “spend more time with family?” But the honesty thing is worth harping on in this specific context, because it strikes me that life sciences has more than its share of spinmeisters, hypesters, smoke-and-mirrors actors, and worse. One of the sure tests of honesty, More says, is to ask whether an executive will be candid and forthright about bad news in private, so that board members or advisors can work together constructively to solve the problem.

“You can deliver good news whenever, but delivery of bad news should be pretty quick. If you’re hiding bad news or hoping it will go away, it’s not a good trait,” More says. “When people are forthright, it builds trust.”

Then there’s smugness, that arrogance or sense of superiority. Developing innovative new drugs or devices requires a strong ego, high IQ, stamina, an inspiring personality that attracts other people, and other things. Often, that combination spills over into smugness or arrogance. More says he watches for a lot of the same cues that his sister, a teacher, watches for … Next Page »

Luke, going by his words about dishonesty, the gentleman should be disqualifying Romney as well – the most dishonest candidate ever. Why name Gingrich about smugness, and then not name Romney for dishonesty?

Krassen—sure, there are plenty of dishonest politicians, but like I said, I’m not trying to go in depth on politics in this space. Dan Primack at Fortune has done a nice job truth-squadding some of Romney’s statements.

A bunker mentality is one of the biggest flaws I’ve seen. We can argue whether this flaw is pervasive throughout the industry, but there are some leaders (and companies) who are committed to open, transparent dialogue with all stakeholders, regardless of the issue. Unfortunately, in our industry, many of the those CEOs are based on the other side of the Atlantic!

Jonathan

Hi Luke,

Sounds like Bob is one of the more enlightened VCs and I agree with him completely about character issues. However, a great biotech ceo needs to remain nimble and flexible in their thinking, adaptive to change vs using brute force to quickly abd burn all your cash. So perhaps breaking through the brick wall, first requires a thoughtful, contemplative look to the side, just as long as it does not evolve into constant inaction, or fear of failure as I like to put it. However, I do understand the investors perspective, make your milestones, we are here to fund you. The great biotech CEO, in my opinion, should be in it for the long haul, not just to reach an investor milestone or a transaction. I think true entrepreneurs will push themselves and their team to limit to find a way to get the job done, albeit it may take them much longer than first predicted.

Just got this comment from John McCarter of Soluble Therapeutics in Birmingham, AL.

“You can tell a lot about somebody’s character by the way they interact with those that occupy a “lower rung” on the corporate ladder. While I am normally in the position of soliciting backing from either VC’s or corporate partner’s, I always keep my radar on for how these people treat the servers at restaurants we patronize, etc…

I served and bartended my way through college/grad school – I like to think my asshole-dar is well tuned.”

Paul Frohna

Consulted for a CEO that made loads of money investing in biotechs, which made him think he could run a biotech. Believe me, two VERY different tasks. Trying to maximize profits by cutting costs like investors want, but even before a drug was approved and on the market. Today’s biotech environment requires an honest, dedicated CEO that understands business even more than science.

Deborah

More and Blair are right on. Integrity trumps all else when thinking of people to back in leadership and in life. People will follow a leader who has integrity.
A big downer are leaders who have to be the smartest person in the room and who “know all the answers” . It tends to remove the oxygen from the room. Instead of bringing energy and ideas from all corners of the organization to solve problems, these leaders tend to train people just to do what they are told. Not a winning strategy but somehow seen in too many very smart people.
Great leaders get every brain in the game!

Been There Done That

I think a lot of the bad behaviors in start up management are a direct result of the Board of VC Directors impatiently pushing for their ROI. I had a boss who was ill-tempered and mean, but then again, he had to present data constantly to an impatient BOD.